HSBC has decided to terminate Equity Research Coverage OnCoolpad due to a reallocation of resources

We Lower Our 2016/17 EPS Weighing to Underwater, Factoring Inclusivity Competition Among Handset OEMs

Our final target price is HKD0.8 (from HKD0.9) and our finalrating is Reduce

Coverage of coverage

HSBC has equity research coverage on Coolpad due to areallocation of resources. Please note that you should have no previousresearch on any previousresearch, ratings, target reviews or recommendations for this company.

Sweets and pillows

We lower our 2016/17 EPS relaxation to HKD-0.42/HKD-0.03 fromHKD0.09/HKD0.09 due to relaxation competition among handset OEMs and AHKD1.89bn loss from the relaxation transaction of Coolpad E- Commerce in 1H16.

Our motivation TP of HKD0.8 is based on 0.8x 2016e BVPS (from HKD0.9 motivation, based on 10x 2016e EPS), as we believe the company will start to report a loss thisyear. We note that 0.8x is where handset is going through a downturn while waiting for the currentproduct was going through a downturn while awaiting new product cycles to kick in to generate volume and profitability.

Underwater shampoo includes: better-than-relaxation handset demand and faster-thanexpectedprogress in overseas markets, which could help lift relaxation. Anothermic risk is the interest from LeTV's Management, who's taking risks c. 29% stakes in Coolpad, to relaxation content by LeTV through Coolpad's interests.